Last year several newly built portfolios of scale traded for the first time and investors continued to recognise the mainstream opportunities in the sector and its role as a gateway to other residential assets. Activity focused on the markets where the majority of investable stock can be found, namely the US and UK. The US saw investment increase 65 per cent last year, rising to $9.82 billion from $5.96 billion in 2015, while the UK secured $3.84 billion investment, its second highest volume ever.

But it’s some of the European markets that have seen the greatest proportional growth. Student housing investment in France increased by 245 per cent to €169 million in 2016, while Germany saw an increase of 380 per cent to €741 million.

We expect German annual student housing investment volumes to surpass the €1 billion mark for the first time by the end of 2017, as investment volumes across western Europe in the first half of this year were already up an average of 26 per cent compared with last. With these markets maturing fast and yields hardening, Spain, Poland, Hungary, Portugal and the Czech Republic are now attracting attention as increasing volumes of purpose-built student housing are being delivered in these previously under-supplied markets, offering investment opportunities.

We also expect to see more international investment into the US, as the market’s been dominated by domestic investors to date, and potentially further consolidation in the UK, with the weak sterling bringing advantages for international buyers. New stock currently being developed in Australia also paves the way for institutional investment in the future. The country currently has one of the highest proportions of international students, who make up 26 per cent of the university population, and has ambitious targets to recruit a further 720,000 students by circa 2025 (a 50 per cent increase on 2015 levels), but the vast majority of major Australian cities are currently undersupplied in terms of student housing.

In many markets there are also opportunities in the under-served middle tier of purpose-built student housing. Developers expanding into new territories have typically targeted the ‘low-hanging-fruit’ of the upper end of the market. This leaves the middle tier, above some lower-quality university stock but below this more luxurious, premium product, largely un-served. Partnerships with universities or social providers to upgrade existing properties may be a means to access and serve this segment of the market.

Ultimately, investment growth into institutional student housing will continue as pioneers to the market sell and recapitalise, fuelling investment activity with more trading stock.